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New forms of employment

Employee sharing, Germany


Case study 1: AGZ Sdbrandenburg
Employee sharing began in Germany 10 years ago, but its practice is not widespread due to the
current laws on temporary agency work which have hindered its development. This study
documents the case of AGZ Sdbrandenburg, the oldest example of employee sharing in
Germany, which epitomises the challenges faced by employers in introducing this innovative
employment form.

Introduction
Employee-sharing was introduced in Germany in the early 2000s, by adapting the model of the
French employer groups (groupements demployeurs). While there is no legal definition or
framework for employee-sharing in Germany, an Arbeitgeberzusammenschluss (AGZ) is
generally understood as a pool of companies, private employers, associations or regional
authorities sharing human resources in the form of a cooperative HR management arrangement.
The aim is to:
provide the participating firms with qualified and reliable staff at a reasonable cost;
transform insecure employment into secure full-time employment;
improve the economic development of the participating firms and the region through better
flexibility, anticipation, strategy and innovation skills, expansion and diversification potential
(AGZ Infozentrum, 2013; Osthoff et al, 2011).
The participating companies are jointly responsible for the employees hired by the AGZ, who
work exclusively for them on a rotating basis. Based on standards drafted by the Federal
Association of German Employers Alliances (Bundesverband der Arbeitgeberzusammenschlsse
Deutschland e.V.), German employers alliances, as well as the participating firms, voluntarily
commit themselves to guarantee that the shared workers pay and conditions are equal to those of
their core staff (see Case study 2: Policy analysis).
Although employee-sharing has been going on in Germany for about 10 years, it is still not very
widespread. By the end of 2013 there were seven AGZ in Germany, with about 110 participating
companies and about 100 shared workers (Case study 2). This case study documents the AGZ
Sdbrandenburg as it is the oldest and has experienced some challenges in its development.
Information was gathered through desk research and interviews with the AGZ management and
other relevant stakeholders.

General characteristics of the AGZ Sdbrandenburg


The AGZ Sdbrandenburg is the oldest employer group in Germany. It is in the Spreewald
region, about 60100 km southeast of Berlin and about 60 km from the border with Poland
(Spreewald website, 2013). The area is known for its agricultural and mining activities and as a
tourist destination.
The AGZ was established in 20032005 as AGZ SpreewaldForum; a pilot project in the
framework of a transfer study with legal expertise and a feasibility study to test the possibility of
establishing German employee-sharing on the basis of the French model (Kratz and Bcker,
2009).
Being the first AGZ in Germany, it experienced several problems but also found solutions for
them (Hartmann and Wlfing, 2012). Nevertheless, in March 2012, the AGZ SpreewaldForum
had to file for insolvency. It was merged with another regional group, the AGZ Elbe-Elster,
forming the AGZ Sdbrandenburg later in 2012, which meant that it maintained its main
elements while operating on a new, more economically sustainable basis (Hartmann and Wlfing,
2012).
By the end of 2013, the AGZ Sdbrandenburg had about 40 regional member companies and
employed about 60 workers. Participating companies are mainly in the field of agriculture, food
processing, office services, catering, tourism and related services. The majority of shared workers
are agricultural workers or unskilled workers, but there also are some skilled workers such as
accountants or specialists in the fields of IT, marketing, quality management and occupational
safety (see AGZ website under Information sources below).
The workers are placed only in the participating companies and, on average, work in two to four
different workplaces per year, with varying rotations (for example seasonally or weekly). The
workers have a work contract with the AGZ and are treated equally, in terms of wages and
working conditions, to the core staff of the member companies where they work (AGZ website,
2013).
The AGZ is run as a non-profit organisation. The participating companies face the following
costs:
wages;
social insurance contributions and ancillary wage costs;
membership and management fee (about 15% of the wage costs). (AGZ website, 2013)

Design and implementation process


Osthoff et al (2011) mention that AGZ are often initiated by an external party which wants to
strengthen regional cooperation and structures, and keep qualified workers in the region by
offering them attractive jobs (income and employment security). This was certainly true of the
AGZ SpreewaldForum, which was established because companies, especially smaller ones
without proper long-term proactive HR management, were experiencing increased difficulty in
getting qualified specialist workers on a part-time basis (Tamen, 2009). Policymakers realised
that AGZ could contribute to firms sustainability by giving them access to the required
competences while, at the same time, creating secure, interesting and attractive jobs for the
workers. Accordingly, between 2001 and 2005 the Brandenburg regional government conducted
feasibility and transfer studies on employer groups, based on the French model (Case study 2).
The AGZ SpreewaldForum was established as a pilot project in Brandenburg. In late 2003,
Tamen, a private organisation supporting development programmes in rural areas responsible for
the above-mentioned studies, commissioned by the regional agricultural ministry (Ministerium
fr Infrastruktur und Landwirtschaft, Land Brandenburg) approached an expert on the economic

and labour market characteristics of the region, asking him to set up and manage the AGZ. At the
time this man was working on regional labour market promotion/integration measures (also with
a strong focus on young people) and economic activities (such as the development of a regional
discount scheme) that were strongly based on regional networking (including with companies).
These experiences meant he knew the best methods to approach and engage companies in specific
activities in a sustainable way. Furthermore, he had succeeded in building up (social) networks
with regional firms characterised by mutual trust. He welcomed the idea of establishing an AGZ
in the area and agreed to contribute to the project. He wanted to be able to offer job opportunities
to workers who wished to remain in the region or start work there, and to achieve this by using
his existing company networks. He assumed that an AGZ could achieve these objectives by
creating an independent, self-sustainable structure rather than depending on external public
support.
The project team first discussed the proposal for an AGZ with regional policymakers, including
trade unionists, and companies that were interested in the idea. At the same time, a very rough
assessment was made of the possibility of combining HR demand from companies. This was
because the team wanted to avoid creating precarious work. In the first half of 2004 the manager
talked to about 5060 regional companies (mainly agricultural firms) to see if they would be
interested in participating in an AGZ, and if so, what their needs would be. About 10 firms agreed
to join an AGZ if it were established and suggested how such an AGZ could be organised. The
combined needs of these 10 firms amounted to about 10 workers.
This was a satisfying result for the project team as they had wanted to create a AGZ with enough
member companies and workers to justify a designated AGZ management (in contrast to many
French employer groups, where there are so few shared workers that they are managed by one of
the participating firms).
The manager thinks that his existing good relationship with these companies facilitated this prestart-up phase. Some companies were sceptical about the concept of an AGZ due to their
unfamiliarity with the model; they couldnt see the difference between an AGZ and a temporary
work agency. Also, there was neither a German role model nor any laws providing the
framework conditions. Furthermore, the concept of AGZ requires some medium to long-term
strategic HR planning, not carried out by the regions small companies. They also had difficulty
in seeing the benefits of an AGZ (and were therefore not very willing to spend time discussing it).
Nevertheless, even those companies were willing to give it a try as they trusted the manager and
knew that he would not exploit them. However, the manager was also faced with the problem that
he had no personal experience of how AGZ worked, and only limited information, and therefore
was unable to answer some of the companies more specific questions.
On the basis of the first assessment, the second half of 2004 was devoted to a more in-depth
analysis of the situation. This included, for example, a comparison between the amount of money
companies currently spent on the jobs flagged for the AGZ and the anticipated costs of AGZ.
This, again, turned out to be a challenge for two reasons:
Many companies did not know what the HR costs for a specific job would be, as they lacked
detailed documentation. This was therefore estimated in discussions between the company
boss and the AGZ manager.
Since no other AGZ existed, there were no templates for estimating the costs of AGZ workers
for the companies or the rates to be applied by the management.
On the basis of this, an hourly gross wage of 6 was calculated for the workers, resulting in
hourly costs of 10 for the employers (this included the AGZ management/administration fee).
The employers were initially against this, until the manager explained that, in practice, this meant
cost savings which they had not been aware of (such as costs for staff administration, recruitment
and induction, and those arising from staff fluctuation).

Legal issues, such as contractual arrangements, also had to be considered. Many things here had
to be invented; simply copying the French model was not possible due to differing legal
frameworks. This was done by the manager in cooperation with Tamen, and then cross-checked
by the companies. Also, and again in contrast to France, various options for its form were
considered as there was no law providing for this in Germany. The final decision was for a
private limited company with one shareholder (the manager of the AGZ) as companies were not
willing to participate in the organisational structure of a new entity (for example, a cooperative or
a foundation). It was planned that this private limited company would engage with the companies
through cooperation contracts. Accordingly, the private limited liability company was established
in December 2004. The manager says that if he had not agreed to start up the AGZ in this form it
would not have been established at all, in spite of the general interest, as no one would have taken
the initiative, and consequently no other AGZ in Germany would have been set up either, as they
benefited from the experiences of the pilot project and the continued interest from policymakers.
In parallel to the start-up, the manager applied for authorisation of a temporary work agency
(MLUV, 2005). While this was granted without problems, approaching banks for finance was
more difficult. They were unwilling to lend money because of the unknown business model,
which meant they could not assess how realistic the business plan was; they insisted on seeing
results before granting finance.
As mentioned above, regional companies were equally sceptical regarding the usefulness and
operational implications of an AGZ. Nevertheless, due to the trust they had in the manager, seven
companies finally agreed to participate in the AGZ, and the first contracts with them were drawn
up early 2005. This resulted in a combined demand for nine workers, and in April 2005 two
women and seven men with occupations such as forestry worker, gardener, blacksmith,
locksmith, carpenter, miller, plumber, and aged from younger than 25 to older than 55 years, were
hired with definite contracts for 35 hours per week until January 2006 (MLUV, 2005). These jobs
were quite different from the ones the previous years analysis had come up with, as the
companies had now with their written agreements in place considered their HR needs much
more thoroughly than they had done previously.
Encouraged by this success, in 2007 the AGZ also decided to train apprentices. It reasoned that
sharing skilled labour is possible only if skilled workers are available, and if they are not, one has
to produce them. The managers experience was that smaller enterprises had difficulty in getting
skilled workers due to their limited size. Hence, shared education and training was deemed to be a
good solution as it offers small firms the possibility to engage in apprenticeships while ensuring
that the apprentices receive comprehensive training, even if the individual firms are quite
specialised. From a regional perspective, joint apprenticeship opens up training possibilities for
local people and makes the area more attractive for them to stay. A cooperative, rather than a
private limited company, was thought the most feasible legal form for doing this, and
consequently one was set up in 2008 with the regional companies as its members. It was planned,
in the long run, as the members became increasingly familiar with the characteristics of a
cooperative, to transfer all AGZ activities to this cooperative and use the private limited company
only as an administrative facilitator or close it down completely. However, after the cooperatives
successful start and stable development in 2009 and 2010, the farmers association also decided
to become active in apprenticeship training and to apply for public support. The large regional
farms found this new programme more attractive than the one offered by the cooperative because
the public financial support made it cheaper. The number of participating companies in the
cooperative fell. Nevertheless, they continued with the apprenticeship training as they did not
want to abandon the young people during their training, even though it became very costly for the
cooperative due to its limited scope.
Based on the good experiences with the cooperative in the framework of the apprenticeship
training, in 2010 the AGZ management succeeded in convincing the first companies to transfer

their more general AGZ activities to the cooperative, too. Then, however, the national
government introduced a minimum wage for temporary work agencies which was higher than
most of the wages which the regional companies paid their core staff. This forced the AGZ to
contravene its own principle of equal pay, equal treatment as the AGZ workers, by law, now
had to be paid higher rates too. This not only increased the companies costs of belonging to the
AGZ, this negatively affected the firms attitude towards the AGZ model due to inconsistency in
behaviour. Furthermore, the companies core staff could not understand why the AGZ workers
should be paid higher rates than them (in Germany, temporary agency workers are normally paid
lower rates than core staff) and hence the working atmosphere deteriorated rapidly. Employers
began to leave the AGZ in order to maintain their core workers motivation. One of the
companies was a food processing firm which had employed about 50% of the AGZ workers. The
AGZ managers then asked the remaining companies, on the basis of their previously established
commitment, to take on additional AGZ workers, even though there was no legal obligation for
them to do so. Some of the smaller companies were willing to support the AGZ by taking on
additional workers while some of the medium-sized ones did not. This left the AGZ management
(that is, the private limited company) with outstanding HR costs and not enough member
companies to absorb them.
This drop in member companies, as well as the costs of the apprenticeship training, resulted in the
AGZ filing for insolvency in the first quarter of 2012. In more detail, this is mainly attributed to
five particular aspects (Hartmann and Wlfing, 2012).
The concept of AGZ was so new that setting it up entailed a lot of effort in persuading
companies and authorities of its benefits; there was limited access to public support and
little appreciation by regional companies.
The legal form of a one-person private limited liability company resulted in a situation in
which all member companies had relationships with the AGZ manager, but not with each
other. Little shared responsibility to secure employment could be established.
Many member companies followed an unfavourable payment practice. They benefited
from the high efforts and favourable terms the AGZ offered, but did not provide
reliability and accountability.
Member companies did not have participation rights in the AGZ, making them unwilling
to take on responsibility for the AGZ.
The AGZ aimed at achieving stability by signing up a large number of companies and
workers. However, this meant involving companies that did not fit perfectly in terms of
work and qualification structure and some that rejected the idea of shared responsibility
and loyalty.
In spite of this economic blow, the AGZ management still received messages of support from
regional companies which wanted it to carry on. Furthermore, the AGZ had already caught the
attention of policymakers as a role model of AGZ in Germany. It was approached as a centre of
expertise and experience by other interested parties, including other German regions, which
wanted to establish an AGZ. The AGZ management felt that if it stopped, there would never be
any AGZ in Germany at all and, being enthusiastic about the concept, started thinking of how to
carry on.
The AGZ manager approached the management of the AGZ Elbe-Elster, another regional AGZ in
its start-up phase, which had tried, since about 2002/2003, to establish an AGZ, but had had no
success in persuading local agricultural companies and stakeholders of its benefits. Nevertheless,
still convinced about the concept, they continued working on it, mainly focusing on small
companies which had more difficulty in solving their economic and labour market challenges and
which were open to new solutions, even if untested. The AGZ Elbe-Elster management, looking
at the experience of the AGZ SpreewaldForum, also broadened their approach and tried to
involve non-agricultural companies that could use HR resources outside the agricultural high

season. By 2008 they felt informed and confident enough to start operations. At the beginning of
2012 they had secured the first participating companies and a solidly working AGZ, even if
limited in scope. Then they were approached by the AGZ SpreewaldForum and learned what had
happened. Like the AGZ SpreewaldForum management, they too felt that if the German pilot
AGZ was discontinued, it would never be used in Germany as it would be thought of as bad
practice. In order to avoid this, they agreed to support the AGZ SpreewaldForum.
They decided to merge the two AGZ into the AGZ Sdbrandenburg. They wanted to establish the
new AGZ as a cooperative, because of the difficulties experienced with the legal form of the oneperson private limited liability company. However, this was rejected by the insolvency
administrator. The management then decided that, in order to achieve stronger integration by the
participating companies (while limiting their risk and administrative burden), the legal form
should be that of a limited partnership with a limited liability company as general partner and the
participating employers as other partners. This meant that participating firms were now obliged to
use the level of HR services they had initially committed to. It turned out that smaller firms
willingly agreed to this provision, as they had fewer alternatives to satisfy their HR needs, while
longer negotiations were needed to persuade larger firms who are better able to cover their HR
needs through other employment forms, including more expensive ones if they are associated
with less legal liability.
After the merger of the remaining companies and workers of both AGZ, the national government
increased the minimum wage of the temporary agency sector at the end of 2012, which was a big
blow for the struggling AGZ. The participating companies announced that they could not finance
this increased minimum wage level for the type of work conducted by the AGZ workers, and
AGZ managers again had to engage in intensive discussions to convince companies about the
advantages of the AGZ. At the same time, they were also dealing with the internal reorganisation
after the merger, redrafting working methods, processes and procedures. Nevertheless, by the end
of 2013 the AGZ Sdbrandenburg was stable, with sufficient participating companies and
workers to safeguard its efficient working. However, the AGZ management feels that for longterm sustainability further growth is crucial, as is a more favourable external environment,
particularly regarding legislation.

Working method, processes and procedures


The management of the original AGZ SpreewaldForum consisted of three staff members. One
acted as a contact person in the AGZ office, continuously accessible for companies and workers
and responsible for coordination within the AGZ. Another was responsible for administrative
tasks such as payroll accounting, financial management and annual balance sheets. The third was
responsible for networking with the companies and the workers and spent a lot of time on site
visits in the region. The AGZ management also employed two apprentices in the administrative
field and a consultant who helped coordinate the apprenticeship training.
The management of the merged AGZ Sdbrandenburg comprises four people (as of October
2013). None of them is working full-time in the AGZ management, resulting in a management of
about two full-time equivalents. From their experience, this is well in line with the current extent
of the AGZ and the characteristics of the shared workers (which influence the management fee
charged to the participating companies, as these are based on the paid wages) and is sufficient to
cover the administrative costs of the AGZ. As before, one person permanently covers the AGZ
office as an access point for companies and workers and another one is mainly involved in active
regional networking with the companies and workers. These two also have the main
responsibility for the job interviews and for matching workers and employers in terms of timing,
skills and personality and working methods. The other two managers deal with issues such as
accounting, payments/invoicing, calculations or legal questions.

The managers of the AGZ Sdbrandenburg, based on their expertise and experience, feel that
each AGZ management should consist of at least two people (even if each has a part-time job).
Since managing an AGZ involves a lot of networking with companies and workers, it should be
possible for a client who does not get on with one manager to be able to talk to another.
Furthermore, the ability of a management team to exchange ideas and discuss issues is seen as
beneficial for the quality of managerial decisions.
Due to the development history of the AGZ Sdbrandenburg, the management of the AGZ is
currently (status October 2013) geographically located in two different offices (the previous
offices of the AGZ SpreewaldForum and Elbe-Elster), about 60 km apart. There is continuous
exchange by phone among the two teams and personal meetings at least once a week. The
management feels it is vital to keep each other informed and to ensure a smooth and effective
working of the AGZ.
Osthoff et al (2011) explain, in their general description of working procedures of all AGZ, that
there are one or two annual meetings between the AGZ management and the member companies
to discuss how organisation has developed, its development plans and the alignment of HR needs.
On the basis of this, the management develops an annual plan and the participating companies
guarantee to provide a workload and payment for the workers for the defined periods of time.
This was done by the initial AGZ SpreewaldForum, with employer companies and regional
policymakers participating in the annual meetings and discussing not only specific AGZ issues
but also, for example, regional training perspectives and plans. The AGZ Sdbrandenburg has not
yet held an annual meeting, but participating companies have been sent newsletters about its
general developments.
The AGZ takes care of the recruitment and induction of employees, the drafting of work
contracts, the management of work placements (that is, aligning supply and demand regarding
skills and timing) and payroll services (administration and payment of wages and social insurance
contributions). The management encourages workers that they recruit to draft a wish list of
jobs/tasks, which the management try to take into account during the matching process, because
they feel the quality of work will be better if the workers like what they do.
Other tasks of the AGZ include regularly listing skill needs and providing education and training
for their workers (participating companies share the costs of this). Such training is not always
provided by formal education providers but sometimes by the participating firms themselves
(including learning on the job). In practice, the latter is more appreciated by the AGZ workers as
well as the companies and hence easier to sell. The training is limited to the AGZ workers. Only
formal education/training courses (which are not offered frequently as both workers and employer
prefer learning on the job) are also available to member firms core staff. (It is against the law for
core staff to be sent to work in other firms.)
Furthermore, the AGZ management offers individual services if needed, such as legal advice, HR
management or mediation if difficulties arise between an employer and worker. This is done
either by phone counselling or through personal meetings, either individually or in a group
meeting. However, this is rare.
The AGZ management is also engaged in networking and lobbying (including awareness-raising
activities), particularly at local level, as well as in networking with the local public employment
service. This is done by inviting service staff to visit AGZ companies to show them AGZ
working methods in practice.
In the AGZ Sdbrandenburg, participating companies are not obliged to commit themselves to
specific HR needs over a longer period of time (for example, an annual plan). The AGZ and the
companies agree on specific call-outs (Abrufvereinbarung) indicating the time, location, extent
and content of work as well as the qualifications and other requirements of the worker. In some
cases, such orders result in the more or less permanent commitment of a company to provide

work for a certain number of workers, but this is not the general rule. With some companies, callouts are arranged for about six months, while for others they are organised on a weekly basis.
This mainly depends on the sector or type of activity of the companies, taking into account, for
example, the seasonality of production, dependence on external factors such as the weather and
the fluctuation of order levels, and the ability to anticipate specific HR needs.
For the workers, the AGZ aims at establishing long-term plans of one to two years of work
assignments so that the employees know well in advance about their next employers, workplaces
and tasks. However, for new recruits it takes at least one to two years until a recurring workplace
rotation (on average, workers work in about two to four companies per year) can be established.
This is because a recruit is assigned to a company several times to see whether they are matched
satisfactorily. This means that in the beginning AGZ employees can be given very short notice of
their assignments. Due to the comparatively low wage level (most of the jobs are unskilled), the
AGZ has an unwritten rule that workers should not commute more than 50 km for their
assignments.
The coordination of supply and demand of human resources involves a large amount of bilateral
communication between the AGZ management, the companies and the workers. Sometimes plans
have to be changed at short notice as specific workers are urgently needed in a company at a time
when they are assigned to another. This can be because of unforeseen developments such as the
weather or additional orders. In these cases, the AGZ management negotiates a satisfactory
solution with the affected companies and workers, which depends on a lot of mutual
understanding, commitment and support. In practice, this is generally no problem given the
networking character of an AGZ. In contrast, in a traditional temporary work agency, the client
company would be more inclined to insist on the contractual arrangements being met, regardless
of the HR needs of other employers.
Member companies finance the AGZ management by contributing 15% of the gross wage costs
of the shared employees (AGZ Sdbrandenburg, 2013). The AGZ invoices the participating
companies for the workers called out. Workers receive a fixed minimum wage irrespective of
their placements in an employer company, plus an additional wage for actual work assignments.
The latter depends on the specific employer company (this is equal to the pay for companys core
staff, but it has to be at least the legal minimum wage set for temporary work agencies).
Consequently, overall wage levels of the workers differ during the year, depending on their
individual work assignments. If the worker cannot be offered a specific work assignment for a
certain period of time, the management discusses the workers willingness to use working time
accounts or part-time contracts, agrees to provide the standard payment without work provision,
or considers laying off the worker if there is no prospect of work.
Companies join the AGZ in one of two ways. The most common is that they approach the AGZ
management because they need somebody to engage in less than a full-time job. Less common, is
that the employer can no longer employ a worker full-time but, nevertheless, wants to help that
person get permanent full-time employment.

External support
In the start-up phase of the AGZ, the regional government granted access to financial support for
seasonal workers for costs caused by the necessity to commute. This was vital for recruiting
skilled workers who got this kind of support while working for other companies. The regional
public employment service offices accepted the argument that AGZ employees did the same work
as other seasonal workers in the region who were supported, and therefore were willing to support
the new AGZ (Wlfing et al, 2007). In 2008, however, a political decision was made to withdraw
this support from the AGZ workers.

The preparation and start-up phase of the AGZ SpreewaldForum was supported by Tamen, whose
representatives have considerable expertise on AGZ due to their involvement in the German
feasibility and transfer studies and their contacts with employer groups in France.
Nevertheless, in hindsight, the AGZ managers think it would have been beneficial to have had the
involvement of business consultants, as they are more familiar with the drafting and
implementation of business plans. The reason for this is that an AGZ needs to be considered as an
enterprise, as launching it involves all the issues (economic and administrative) that need to be
taken into account when starting up a company. Expert advice is vital for this.
In the beginning, the AGZ worked with a tax consultant, but management felt this was costly and
unsatisfactory, and so insourced these tasks in 2010.
After the merger which formed AGZ Sdbrandenburg, the management wanted advice on the
best way of designing and implementing the AGZ activities and applied for public support. This
was rejected, however; the AGZ was seen as ineligible because it is not itself economically
oriented but aims at supporting the economic interest of its members.

Outcomes
The AGZ Sdbrandenburg is considered as a pioneer and example of good practice,
demonstrating that AGZ are possible in Germany (Hartmann and Wlfing, 2012). During the first
year of the AGZ SpreewaldForum, in 2005, the number of shared workers increased from nine to
12, of whom six could also be retained during the winter period (traditionally the difficult season
for a labour market in an agricultural area). Even though not all the workers were retained, this
was an important improvement for those who were.
In April 2011, before the downturn experienced by the AGZ, it had about 80 shared workers and
about 30 participating companies (with some fluctuations during the year, depending on
seasonality of the production processes). This indicates the labour market potential of the AGZ in
terms of job creation. While, from a macroeconomic perspective, in absolute terms the numbers
are not very high, from a regional perspective the creation of 80 new jobs, characterised by
satisfactory wage levels and working conditions should be considered as a success. In late 2013,
the AGZ Sdbrandenburg comprised about 1520 companies and about 40 workers (mainly lowwaged agricultural staff and assistants).
The downturn of the AGZ SpreewaldForum in 2012 caused the lay-off of about 40 workers.
Participating companies had to partly finance the insolvency but do not seem to be much affected
by these additional payments and also do not seem to have a particularly negative attitude
towards the AGZ. Only two companies actively withdrew because of the downturn, while the
others left because internal/structural reasons reduced their HR needs.
The AGZ management says some workers highly appreciate working with them as the AGZ
offers them the opportunity of diverse work environments, working methods and tasks.
Sometimes AGZ workers move into normal employment and then change their minds and ask
to return. However, there are other workers who would prefer working for an individual employer
due to better continuity of processes and requirements. Consequently, working in an AGZ is not
the optimal solution for everybody but depends strongly on individual preferences and
characteristics.

Strengths and weaknesses


For companies, particularly SMEs, participating in the AGZ offers the advantage of regular
access to the same (skilled) workers when they have particular HR needs, while at the same time
not being responsible for providing permanent full-time work for them. This reduces induction
time and increases the quality of production/service provision due to less organisational

disruption and better familiarity of the worker with the specific characteristic of the company and
its workflow, as well as increasing the firms flexibility. The joint HR management also reduces
the companies administrative burden and costs, as well as time needed for worker training (AGZ
Sdbrandenburg, 2013).
The important strength of the AGZ, compared with other employment forms, is the idea of
creating a regional labour market. The companies are jointly responsible, which not only results
in the creation of permanent full-time jobs that an individual employer could not provide, but also
in some feeling of cohesion among the individual employers. They take into account, as far as
possible, the needs of the others when reverting to the jointly established HR pool, which
contributes to the overall economic health of the participating firms and hence the region.
Consequently, AGZ can bring economic advantages and flexibility for the companies, while at
the same time creating non-precarious jobs for the workers, even if it is limited in scope in
macroeconomic terms. While temporary agency jobs are often discussed as a stepping stone to a
workers first job, the AGZ sees itself as the first labour market, aiming to provide permanent
full-time jobs to the AGZ workers and ensure good working conditions (equal to the core staff of
the participating firms). The intention is to create jobs in which workers are repeatedly working in
the same companies for years, rather than continuously carrying out short-term chain assignments
in a large variety of firms.
Another advantage for workers is the opportunity to increase or update their skills and expertise
through learning on the job. Working for different employers means they are confronted with
different tasks and infrastructures and hence have more learning opportunities than they would
with just one employer. This is a good way to maintain and upgrade skills and expertise, and
hence to foster employability, particularly for workers reluctant to get involved in formal
education and training.
On top of that, the AGZ management offers a personal element to both employers and workers.
When matching them, the managers try to consider individual preferences as far as possible, (also
taking into account human nature, as not everybody is able to get along). For this purpose, the
AGZ managers need to be well informed about the companies and the workers, and this level of
information goes far beyond what is common in other employment relationships. The
management has received feedback from workers about this, saying they feel well supported, and
are recognised for their talents.
From the regional perspective, the strength of the AGZ is that it creates and provides sustainable,
good quality employment. This makes the region attractive for workers and young people (as
apprenticeship training is also offered) and, in turn, is also attractive for companies as it
counteracts the problem of a shortage of workers.
A weakness of the initial AGZ was its basis as a one-person limited liability company; this
resulted in a situation in which the participating companies did not have joint responsibility for
the AGZ workers, but were only in a contractual relationship with the AGZ manager. This was
also supported by the legal framework of the temporary agency legislation, specifying that the
HR responsibility is with the lending company, as the client company which outsources this
responsibility to the lending company through the management fee. This, however, is not done in
an AGZ which is not oriented on profit generation but on HR coordination and hence does not
charge as much as a temporary work agency.
The legal form also limited the financial basis of the AGZ to the equity of the private limited
company, while in cooperation-based forms (such as cooperatives or foundations) the
participating firms would also have to contribute to this, making the legal entity financially more
sustainable.
Another weakness in the early phase of the AGZ was the managers lack of business experience
in running an AGZ, caused by the newness of the model in Germany; the limited amount of

expertise that could be culled from the French experience and the fact that they did not use
business consultants. This resulted, for example, in the calculation of management fees charged to
the participating firms that turned out economically unsound for the AGZ management. With
increasing experience, this was adjusted over time.
The managers also blame themselves for some of the problems. For example, they decided to
follow a strategy allowing one big food processing company to employ about 50% of the AGZ
workers as this secured jobs during the agricultural low season. However, this caused too high a
dependency on this single firm which contributed to the AGZ failing when the firm left.

Future plans
In spite of all the challenges faced by the AGZ management, they are still convinced of the
benefits of such a concept and work to promote not only the growth of the AGZ Sdbrandenburg,
but the establishment in general of the AGZ model in Germany.
The main objective of the AGZ management is to increase the number of participating companies
and workers (they hope to get at least 4050 workers), as they feel that an AGZ can work
effectively only on a large scale. The flexibility demanded by the participating companies can be
achieved only if a big enough pool of workers is available, and they can be properly organised
only if there is a big enough pool of employers sharing them; otherwise no permanent full-time
employment can be achieved. The management is therefore approaching regional companies
previously involved in the AGZ SpreewaldForum as well as other regional firms, to try to
convince them about the benefits of belonging to an AGZ. As mentioned, only two members of
the original AGZ withdrew because of its downturn. Most left for external reasons, such as the
cessation of a distribution monopoly forcing the affected companies to restructure. The AGZ
management is optimistic that they can once more secure sufficient level of interest among
regional companies.
The AGZ management also has some ideas about diversifying its operations. Examples are
enhanced offers of HR services, including long-term HR planning, health management, mediation
of conflict or staff training. However, companies would have to pay for these additional services
(to offset the cost of their development and implementation), and it is questionable whether they
would be willing to do so.
Nevertheless, in spite of their ambitions and the efforts the AGZ management assume that the
AGZ will not last more than two or three years because of the adverse framework conditions.
Furthermore, while companies and workers can be attracted to a different way of working
because of its exciting new features, both become more reluctant to participate if there is no
further development, and their present conditions are badly affected by external developments.
This can lead to the danger that employers and workers will lose interest and find alternative
employment forms. The management of the AGZ Sdbrandenburg has already observed that
many employers who are initially willing to support them get tired of facing the challenges
inherent to this employment form in Germany, and which have not been improved for a decade.
The regulations on temporary agency work (Arbeitnehmberberlassungsgesetz, AG) are the
biggest barrier to developing the AGZ Sdbrandenburg (and by extension, the development of all
the other AGZ) (Hartmann, 2012; Wlfing et al, 2007). While the management appreciates the
intention of the legislation and the way it protects these employees, it does create considerable
problems in running the AGZ (Case study 2).
The management is lobbying for a change in the law; however, although policymakers are
interested in the concept and see the advantages of AGZ, they are not willing to offer support
unless the AGZ gains economic and labour market importance which is unlikely to happen
under the current law.

Commentary
The management of the AGZ Sdbrandenburg refers to AGZ as a revolution in labour market
promotion. This is because they rely on regional employers cooperating to create a sustainable
regional labour market benefiting both companies and workers, rather than being dependent on
public support. AGZ appeal to the employers community spirit by getting them to consider the
needs of their fellow entrepreneurs and those of their workers. To do this, it is important that
there is a good level of commitment and networking as well as mutual trust. The example of the
AGZ SpreewaldForum shows that an AGZ can really benefit if such an atmosphere already exists
before it is set up, and also if there is a strong anchor person driving its establishment and
development.
It seems that the AGZ Sdbrandenburgs existence, as well as most other German AGZ, is due to
the ambitions and efforts of a few individuals. While the regional government, employers and
employees organisations are generally convinced about the model, little practical support is
evident. In fact, existing laws which recognise AGZ as temporary work agencies hamper their
operations, as well their image among policymakers and the economy. The management of the
AGZ Sdbrandenburg appreciates the need for laws safeguarding workers, but wants regulations
specific to AGZ and consequently less of a barrier to their effectiveness. Such regulations should,
for example, also take into account the business objective of an AGZ, which is not profit
maximisation, but the promotion of the economic interest of their members. Furthermore, any
regulations should consider that AGZ are not a separate sector (as currently implied by the
temporary agency legislation), but form part of the regional economic and labour market system
and its sectoral characteristics.
It is important to alert policymakers, companies and workers to the features of AGZ and to clarify
their potential strengths and weaknesses compared with other employment forms. A better
developed system of support structures (including, for example, specialised business and tax
consultants assisting the start-up and running of AGZ) would also be beneficial for the future
development of German AGZ.

Information sources
Websites
AGZ Infozentrum, available at http://arbeitgeberzusammenschluesse.de.
AGZ Sdbrandenburg, available at http://www.agz-ee.de/.
Spreewald, available at http://www.spreewald.de/.

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